The year-end for a business refers to the fiscal year-end but it also relates to what needs to be done at that time.
As the fiscal year-end is usually a 12-month period the business as been operating, it can be shorter if it is the first year the company is in business; sometimes this is necessary for tax planning purposes.
Note that fiscal year-end is does NOT always coincide with the calendar year-end. It can be from July of this year to August of the next year, as long as it is a 12 month period.
In any event, at that time the business needs to be prepared to ensure their business financial records are final and complete.
Why?
In order for business taxes to be accurately calculated there needs to be:
- proper finalizing of business transactions in the bookkeeping records
- accounting for everything related to the business finances in a proper manner
- ensuring reconciliations are accurate and complete
- anything else that is needed assess corporate or business taxes.
The Bookkeeper’s Essential Role
The end of the year of any business can be a very busy and hectic time. There are preparations to be made for the proper filing of the company taxes that will only be correct if the bookkeeping records throughout the year have been properly maintained and perfectly organized.
Most businesses will hire an outside tax accountant to handle their end-of-year tax filings in order to ensure it is calculated and filed in accordance with the latest income tax laws.
A good tax accountant will be current on all matters relating to business tax and will be able to obtain the most tax savings possible for the business.
Although bookkeepers are well trained professionals with a good understanding of the company’s financial transactions, the expertise of taxation should fall with a professional that is exterior to the company. However, the bookkeeper is uniquely positioned to assist with the year-end and working with the tax accountant is instrumental in making sure this process runs smoothly.
Frontline Role of the Bookkeeper
At the close of the year, the bookkeeper needs to provide certain information for the tax accountant.
Usually, the tax accountant will provide a list of the information they need to properly assess the business taxes and facilitate tax planning.
Being aware of what the tax accountant requires in advance is helpful to the bookkeeper in being proactive and anticipating what information should be collected and assembled.
It also for the betterment of the business if the bookkeeper is well versed with these requirements and is familiar with the process of the filings that are being prepared.